UCB, Interfax develop system for evaluating SMEs‘ credit risks

Interfax and the United Credit Bureau (UCB) have launched an analytical service for evaluating companies‘ credit risks intended to boost the access of small and medium-sized enterprises (SMEs) to bank financing.

The new service makes use of the UCB‘s accumulated credit histories of legal entities and individuals (founders and managers of companies), as well as comprehensive data from SPARK-Interfax, Russia‘s leading system for evaluating business risks.

Aggregate credit risk assessments (SPARK-UCB Business Scoring) are generated using all available data about the businesses in question, processed according to a method developed by UCB and Interfax analysts. The service also envisages the development of customized models for evaluating borrowers‘ credit ratings at the request of banks.

"The launch of Business Scoring is our response to increased interest among banks in financing for small businesses," said UCB General Director Artur Aleksandrowicz. "Our clients are increasing their portfolios of loans for small businesses, bringing new products to the market, launching pipelines for issuing loans to businesses. All of this requires automation of crediting processes and is creating demand for new analytical instruments. In order to support the trends that have taken shape in financing businesses, we‘re now providing banks with a real-time, high-quality, accessible tool for assessing companies‘ risks."

"Statistics show that financing hasn‘t extensively penetrated micro and small business; only 5% of acting companies have active loans, though among individuals the share exceeds 50%," said Interfax‘s Executive Director Vladimir Gerasimov. "Thus, the potential for growth in financing for small business is high, and our new service should help uncover this potential and increase the accessibility of bank financing for small business."

As part of the project, the UCB and Interfax carried out a comprehensive analysis of the Russian market of financing for small businesses. A survey showed that most entrepreneurs currently consider the process by which banks assess their loan applications to be complicated, long, and opaque. A detailed analysis of missed payments in the SME segment showed that the real level of defaults (accounting properly for debts accumulated in previous years and analyzing credit portfolios by generation) has fallen to under 3%.

"Lending volumes fell after the decline of 2013-14. No one bank had sufficient accumulated statistics to develop models for assessing risk on its own," Aleksandrowicz said. "UCB and Interfax save all available statistics on companies, the credit histories of practically every judicial entity, and also have more than ten years of experience calculating scores. All of this allows us to solve the market‘s current problem, which is the lack of high-quality models for assessing businesses."

SPARK-Interfax is the widely acknowledged industry standard in the Russian market of services related to assessing credit risks and ensuring business security. The system is used to conduct due diligence on counterparties and manage risks and receivables. According to a survey carried out by Deloitte, 71.5% of large and medium-sized companies use SPARK to evaluate potential partners. SPARK data on companies is used to calculate analytical ratings such as the Financial Risk Index, Due Diligence Index, and Payment Discipline Index.

The United Credit Bureau stores the credit histories of 90 million individuals and 0.5 million judicial entities. It provides services for every stage of the loan pipeline, from the receipt of credit reports and calculation of scores to comprehensive solutions, including outsourcing the processing of loan applications, portfolio monitoring, and fighting fraud. The Bureau‘s shareholders are Sberbank, Experian, and Interfax.